TBT: Marketers were jumping on the virtual reality brand wagon a decade ago

23 June 2016 9 min read

* This is a Throwback Thursday post, an article from the Marketing archives that resonates today almost as much as it did back in February 2007.

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After Second Life hit the headlines in 2006, global brands were falling over themselves to claim a piece of its virtual reality. Tami Dower sent her virtual alter ego in to see what all the fuss was about.

It’s already midday and the clock is ticking. I have to file this story by this afternoon, but there’s just one more thing I need to do… Before I know it, I find myself in a futuristic amphitheatre, surrounded by mystical mountains and purple trees, listening to a live folk music performance.

No, I’m not daydreaming; I’ve just popped into Second Life for one last hurrah before I return to the real world to face the onslaught of deadlines that awaits me. Admittedly, the concert is a diversion from my original purpose – to visit some of the ‘in-world’ trading hubs recommended to me by my Second Life tour guide, Bret Treasure (known ‘in-world’ as Biscuit Carroll). But no sooner have I logged in, than Treasure suggests I join him and some other Second Lifers at the newly created ‘Gamay’s Retreat’ to watch folk singer Gamay Nouvelle perform. Treasure extends an invitation to teleport me there and I obligingly accept.

While it might not exactly count as researching the marketing opportunities of this virtual world, it makes a welcome change from wandering around solo and trying to make sense of this often-confusing place. It also gives me a nice little window into the interactive potential that exists here (although as I lurch erratically around the venue trying to work out how to sit myself down, I’m painfully aware that I’m being a little too interactive – thankfully, my fellow patrons seem to appreciate the humour in my predicament).

Navigation is just one of the challenges faced by newcomers to Second Life, a three-dimensional world populated by virtual characters called avatars. Launched in 2003 by Linden Lab, a San Francisco-based company, Second Life is not so much a game as an animated version of reality. In-world journalist Wagner James Au sums it up as “a cross between a three-dimensional development platform and a chat program – AutoCAD meets the Sims”.

Residents are provided with the tools to create and do whatever they like – build houses, open shops, hang out with friends, go sailing, go to music festivals, visit virtual brothels and even marry other avatars.

Second Life is initially free to download and play. Residents are only required to pay if they choose to own land, for which they’re charged a monthly lease fee. And, of course, there are plenty of discretionary spending opportunities.

Shopping is a very popular in-world pastime, with an infinite range of virtual commodities on offer – property, clothes, wigs, skin textures, body parts, cars, flying cows, theme parks, tornadoes… there are even guns that shoot watermelons, or – if your preference is to make love rather than war – you can have your avatar kitted up with interactive genitalia. You name it, someone in Second Life is probably making it.

And it’s not all for the joy of creation – there is some serious money to be made here. In-world trading is based on the Linden dollar, which can be converted to US dollars at several online currency exchanges. (At the time of writing, the exchange rate was around L$271 to US$1.) According to Linden Lab estimates, more than half a million US dollars changes hand in-world every 24 hours. In November last year, Second Life even spawned its first millionaire – virtual property developer ‘Anshe Chung’.

In May last year, before she reached the millionaire milestone, the story of Chung’s burgeoning fortunes was chronicled in US magazine BusinessWeek, prompting a global explosion of interest in Second Life. Since then, the online population has ballooned, bringing the current total to around 1.8 million (and counting). Of those, an average of 60,000 apparently log in every 24 hours.

According to Linden Lab, residents come to the world from more than 100 countries, with concentrations in North America and the UK. Demographically, 60% are men, 40% are women and they range in age from 18 to 85. Residents come from all walks of life – gamers, housewives, artists, musicians, programmers, lawyers, firemen, political activists, students, business owners, architects and medical doctors. One thing they all have in common though, is access to broadband and – at least at this stage – a tendency to be reasonably tech-savvy.

Real-world businesses taking the virtual leap

Running parallel to Second Life’s population boom is a rapidly growing presence of real-world businesses. One of the first to arrive was US clothing label American Apparel, in June 2005. Since then, scores of well-known brands have made their Second Life debut, including Amazon.com, Toyota, Adidas, Sony BMG, IBM, Dell, General Motors, Nike, Warner Brothers, Reebok, Disney, Vodafone, Starbucks, eBay, Pontiac, Nissan, Reuters and Starwood Hotels (owner of the Sheraton and Westin hotels). Even a few ad agencies have joined the fray, with Leo Burnett being one of the first.

According to Treasure, who runs a virtual marketing agency alongside his Second Life tour company, the Australian Film and Television School is so far the only organisation from Down Under to enter Second Life.

While the mainland is a public ‘free-for-all’, most of the corporate activity takes place on privately owned islands, of which Treasure believes there are now around 3000. Some of these are open to the public, but many have restricted access.

As I quickly discover, finding your way around this vast online universe can be quite tricky, so it’s handy to have a tour guide like Treasure to show you around. My acquaintance with Treasure stems from several failed attempts at a self-guided tour of real-world brands that have set up shop here. Not only is Treasure a wealth of knowledge on places to visit, he also saves me a lot of time, helpfully teleporting me out of frustrating showdowns with too-narrow doorways and corridors (manoeuvrability not being my avatar’s strong point).

Our tour of real-world brands that have set up shop in Second Life begins at the island of Canadian telco Telus. The shop is unattended, but there is a virtual answering machine – a facility that allows you to leave a written message for the absent storeowner. At this point Treasure tells me that you can get residents to man your store for around 30 US cents an hour. There’s nothing, however, to stop you from browsing the wares in the unmanned store so I take the opportunity to look around. As I zero in on a glass cabinet full of remarkably realistic-looking mobile phones, I notice I’m being offered the option to add a free showbag to my personal inventory. I click on the goodies bag, which contains a phone, a shirt and something called a ‘pose stand’.

This, Treasure informs me, is to keep my avatar still. Designed to be lifelike, avatars have a tendency to move around of their own accord – which can make a simple task like trying on a pair of shoes a source of intense consternation.

With our whirlwind tour of Telus complete, Treasure teleports me to Slackstreet Island, home of the Warner Brothers listening lounge, where musician Regina Spektor was launched. Spektor herself isn’t there, but if you click on a tape player, you can hear her music. Don’t like the song? Just click on another one – and watch as the whole scene changes around you to set an appropriate ambience for the track of choice.

Our next stop is Avalon Island. Rivers Run Red – a marketing company native to Second Life – has used this island to set up a mall for a number of clients, among them Penguin Books. It is also the site of the Duran Duran lounge. A community of avid Duran Duran fans has evolved here, spurred by the prospect of being there when the real-life band drops in for a visit, which it does from time to time. There is also a theatre on this island. On show at the time of our visit is an animated film clip, complete with music.

Although the concept of video has obvious appeal for marketers, Treasure says the technology is still problematic, suffering from bandwidth problems and general instability of the user interface. There is also a limitation in terms of the number of avatars that can be present in the one place. Apparently Second Life won’t let you have more than 70 people in one location due to server constraints. You can try to sidestep the problem by joining two islands together, but this can lead to degradation in performance quality.

From here, our tour turns to some of the more widely publicised Second Life inhabitants, starting with Starwood Hotels’ Aloft Island. On this island is a virtual hotel that has been built as a prototype for a hotel chain, due to be launched in 2008. The company has invited visitors to provide feedback on the design and feel of the hotel – the premise being that the feedback will be incorporated into the final design. Whether the company will actually take the feedback of Second Life visitors into account remains to be seen – especially as there doesn’t appear to be a feedback mechanism accessible from within the virtual world. If the campaign objective was to generate a bit of publicity, however, it hasn’t failed to deliver.

Our next teleport takes us to the much-celebrated American Apparel store on Lerappa Island. Despite the hype, there’s not a whole lot to do here and the clothing has a distinctively real-world feel about it, in contrast to some of the more outlandish and interesting designs of the in-world fashion designers. Perhaps this is a legacy of the company being the first real-world fashion label to enter the world? Whatever the reason, there’s little here to hold the attention and it’s swiftly off to the next location – the home of computer manufacturer Dell.

Dell’s island is set up as a replica of its computer factory and visitors are invited to come in and configure their own machine, choosing from a range of options and having the ability to examine the final product in three dimensions. At the end of the process, your configuration is stored on the Dell website, where you can then complete the transaction to purchase a real-life computer designed to your specifications.

From Dell, it’s off to IBM’s Almaden Island for a very different experience. Unlike most real-world brands in Second Life, IBM’s public space is not geared towards branding of its core product. The focus here is on developing facilities for remote teleconferencing and induction of new employees. It’s a concept that has been gaining traction among Second Life’s corporate inhabitants of late, with brands such as Wal-Mart, American Express and Intel looking at using the virtual world for their corporate training. Also on Almaden Island is an orientation area, where visitors and new IBM employees can come to learn a few Second Life survival skills. Almaden is just one of several islands owned by IBM, but it’s the only one that’s open to the public. The others are used for internal research.

From IBM, it’s back to Treasure’s own island, where our tour concludes. Before I go, Treasure gives me a demonstration of a product he’s been working on. It’s called a ‘holodeck’ and it allows you to pre-load up to 100 different scenes and switch them at will. So rather than having to own 100 rooms worth of space, you can simply own one and change it whenever you like. It’s an interesting concept, given that Second Life primarily thrives on the sale of virtual real estate. With our tour drawn to an end, I’m left to ponder this and the boundless potential of this place as a marketing medium.

A virtual goldmine?

At this stage, most of the real-world brands in Second Life aren’t there to sell real-word products, or even make money. “What we are seeing from the larger branded companies in-world is that they are using their presence to solicit customer feedback to better improve their real-world product, or to simply engage their audience in a more immersive way,” says Linden Lab director of marketing, Catherine Smith. “Real life businesses are not looking at Second Life as a revenue opportunity, but rather as a way of extending their brands.”

Essentially, real-world brands are using Second Life as a branding exercise and a place to interact with consumers and test new product ideas. New media strategist Ilya Vedrashko says the virtual world provides an ideal environment for experimentation. “The world’s creative flexibility coupled with the pioneering spirit of its residents makes it an attractive sandbox for advertisers willing to experiment with new ideas that might be difficult or costly to try elsewhere,” he says.

As the main focus of activity in Second Life is entertainment, some of the more successful marketing initiatives have been based around events. IBM has sponsored a Wimbledon event, re-enacting it in-world for Second Life spectators. Similarly, Major League Baseball put together a simulcast of the Home Run Derby on a specially designed stadium with a real-time re-enactment of the game. Live music concerts and launch par- ties are also popular attractions.

Experiential marketing is another strategy that resonates well with Second Life residents. Nissan, for example, has set up a virtual racetrack that allows users to ‘test-drive’ its Sentra.

Capitalising on the community-building potential of Second Life, Pontiac has taken interactivity a step further, providing parcels of land on its Motorati Island to Second Life residents who wish to create their own projects devoted to car culture. Standing alongside approved community-based projects will be a futuristic Pontiac dealership selling customisable versions of the newly introduced Pontiac Solstice GXP. Second Lifers will be able to purchase the virtual vehicle, take it for a spin on a high-performance test track, fully modify it and showcase it in a public gallery.

“Our hope is to unleash the community’s passion for cars,” says Tor Myhren, executive vice president and executive creative director at Leo Burnett Detroit. “We envision weekly competitive driving events, drive-in theatres playing car related films, machinima film studios, car-themed fashion shows, live concerts, drive-in restaurants, you name it. If an idea relates to any aspect of car culture, we intend to give the community the means to make it happen.”

The social aspect of Second Life also makes for a very strong viral marketing culture, both in terms of word of mouth and the transmission of virtual creations. “As the seller, you decide what rights the purchaser will have when they buy your widget,” explains Treasure. “You can allow them to make copies, modify the item or pass on the item to someone else. The practice of allowing an object to be copied freely has created awareness of many products.”

In some cases, residents have even voluntarily taken on the role of brand advocates. “Second Life is peppered with user-created objects carrying real-world logos,” explains Vedrashko. “My own inventory includes a larger-than-life bottle of Absolut vodka, a Corona t-shirt, an entire Hooters outfit, a pack of Marlboros, a Mac laptop, a Honda motorcycle, a case of Mountain Dew and a pair of Elmo slippers.” Vending machines giving away Coke, Pepsi and snacks are also a common sight in clubs, while replicas of NASCAR racing cars are emblazoned with the logos of their real-world sponsors. There is also a resident-run store that sells iPods pre-loaded with songs. “All this brand equity is built on pure enthusiasm without a dollar spent on product placement by the trade-mark holders,” marvels Vedrashko.

Integrating your brand into the local landscape

With a growing number of companies jumping on the Second Life brand-wagon, there is no longer any kudos in just being there. Having a successful in-world presence requires a certain level of understanding of the ‘way of the world’.

“The most successful businesspeople in Second Life have taken a look at the business landscape and determined where needs exist. If you are not authentic and do not offer anything to the community, you are likely to be ignored, at best,” advises Smith. “However, those firms who commit to a long-term, creative presence in Second Life have an opportunity to interact with their community in new and innovative ways.”

Smith recommends that people join and spend some time feeling things out before jumping in. Other things to consider, she says, are the need to keep your offering fresh and interactive. “Let your customers join in creating the experience, keep them involved, offer social contexts such as discussions, parties or games and create connections to the real world through a website, content uploads or social tools for connecting and sharing successes.”

According to Treasure, one of the downfalls that a lot of brands succumb to in Second Life is simply trying to replicate their real-world offering. “People are not looking to replicate what they do in real life; it’s about fantasy. A lot of companies are making the mistake of trying to use Second Life to market real-life goods – people are not here to buy real- life goods.

“Businesses should consider the possibility that Second Life’s principal value might not be to help them sell more widgets, but to help them communicate powerfully, especially among remotely located employees,” adds Treasure. “Instead of second-rate virtual shopfronts they should be building virtual offices and virtual communities.”

As in-world business owner ‘Christiano Midnight’ declared in an in-world panel on marketing to avatars, “Any company that comes along and does not understand the environment and just treats it as another marketing venue is doomed to fail.”

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